CA Inter Adv Accounting

Note: The specific figures (trial balance amounts, additional information details) were not provided in this question. The following answer presents the complete framework, classification logic, and Schedule III format that must be applied to the given data.

Balance Sheet of Gaurav Ltd. as on 31st March, 2019
(As per Schedule III to the Companies Act, 2013)

EQUITY AND LIABILITIES

1. Shareholders' Funds
(a) Share Capital — Equity Share Capital is shown at the paid-up value of shares issued. Calls in arrears (if any) are deducted; calls received in advance are shown separately under Other Current Liabilities.
(b) Reserves and Surplus — Includes General Reserve, Securities Premium (if any), and balance of Statement of Profit & Loss (surplus or deficit).

2. Non-Current Liabilities
(a) Long-Term Borrowings — Loans from banks/financial institutions with repayment period > 12 months. Interest accrued on long-term loans is classified under Other Current Liabilities (current maturities).
(b) Long-Term Provisions — Provision for employee benefits, warranties (if long-term).

3. Current Liabilities
(a) Short-Term Borrowings — Bank overdraft, short-term loans.
(b) Trade Payables — Amounts due to suppliers of goods/services (creditors). Schedule III requires separate disclosure of dues to Micro and Small Enterprises vs. others.
(c) Other Current Liabilities — Includes interest accrued but not due on borrowings, interest accrued and due, current maturities of long-term debt, advance received.
(d) Short-Term Provisions — Provision for tax, proposed dividend.

ASSETS

4. Non-Current Assets
(a) Fixed Assets:
— Tangible Assets: Land & Building, Plant & Machinery are shown at cost less accumulated depreciation. Land is not depreciated. Gross block, accumulated depreciation, and net block must be disclosed via a Fixed Asset Schedule (Note).
— Capital Work-in-Progress if applicable.
(b) Long-Term Loans and Advances — Security deposits, capital advances.

5. Current Assets
(a) Inventories — Stock of raw material, WIP, finished goods, stores — valued at cost or NRV, whichever is lower (as per AS 2).
(b) Trade Receivables — Schedule III requires classification into:
— Debts outstanding for a period exceeding six months from the date the invoice became due for payment (shown separately).
— Other trade receivables.
Further sub-classified as Secured/Unsecured and Good/Doubtful. Provision for doubtful debts is deducted.
(c) Cash and Cash Equivalents — Cash in hand, balances with scheduled banks. Balance with non-scheduled banks must be disclosed separately in notes with name of bank and maximum balance during year.
(d) Short-Term Loans and Advances — Advances to suppliers, prepaid expenses, advance tax, TDS receivable.
(e) Other Current Assets — Accrued income, interest receivable.

Key Classification Rules Applied:

— Interest accrued but not due → Other Current Liabilities (if on borrowings) or Other Current Assets (if receivable).
— Non-scheduled bank balance → Disclosed separately in Notes to Accounts under Cash & Bank Balances with maximum amount outstanding during the year.
— Debtors > 6 months → Separately disclosed within Trade Receivables note.
— Assets and Liabilities must NOT be netted off (Schedule III, General Instructions).
— All figures in the Balance Sheet must be in ₹ (Rupees) or ₹ in lakhs/crores as chosen, consistently.
— Previous year figures are required in an adjacent column (not applicable here as it is the first year or prior year not given).

The Balance Sheet must balance: Total Equity & Liabilities = Total Assets.

Once the trial balance figures and adjustments from additional information are posted to appropriate heads following the above classification, the Balance Sheet of Gaurav Ltd. as on 31st March, 2019 is complete.

Note: The question references a Draft Profit & Loss Account with specific figures, but those figures were not provided in the question as submitted. The solution below presents the complete methodology and framework for calculating maximum managerial remuneration limits under the Companies Act, 2013, which must be applied to the actual P&L figures once available.

Applicable Provisions:

Section 198 of the Companies Act, 2013 prescribes the method of computing net profits for the purpose of managerial remuneration. Section 197 prescribes the maximum limits of remuneration payable.

Step 1 — Computation of Net Profit u/s 198:

Begin with Profit as per Profit & Loss Account (before tax and before charging managerial remuneration).

Add back (items to be excluded per Section 198(3)):
- Managerial remuneration paid/payable (if already debited)
- Depreciation charged in the P&L (book depreciation)
- Any loss on sale of undertaking or investment (not to be deducted)
- Provisions for bad and doubtful debts and losses
- Any income tax or other tax on income paid or payable (if debited)

Less (items to be deducted per Section 198(4)):
- Depreciation as per Schedule II of the Companies Act, 2013 (given as ₹ 28,76,725)
- Capital profits on sale of fixed assets (not being profits from business of sale of fixed assets)
- Profits of a capital nature
- Amounts transferred to reserves as required by law

= Net Profit u/s 198

Step 2 — Maximum Limits u/s 197:

Once Net Profit u/s 198 is determined:

Key Points for Exam:
- Depreciation charged in books may differ from Schedule II depreciation — only Schedule II depreciation (₹ 28,76,725 here) is deductible in computing net profit u/s 198.
- If book depreciation > Schedule II depreciation, the excess is added back first, then Schedule II figure is deducted.
- Remuneration in excess of these limits requires Central Government approval (now through MCA / Registrar).
- In case of loss or inadequate profits, managerial remuneration is governed by Schedule V of the Companies Act, 2013.

To complete the numerical answer, apply the above additions and deductions to the actual P&L figures and compute 11%, 5%/10%, and 1%/3% of the resulting net profit.

Note: The question references specific figures (depreciation amount, interest, discount on debentures, income from lawsuits, tax paid, share issuance proceeds, land cost, dividends, and working capital changes) but those numerical values were not included in the question text as provided. The solution below presents the complete framework and methodology as per AS 3 (Accounting Standard 3 — Cash Flow Statements) using the Indirect Method, with placeholder labels. A student should substitute the actual figures given in their question paper.

Cash Flow Statement of X Limited for the year ended 31.03.2019
(As per AS 3 — Indirect Method)

A. Cash Flow from Operating Activities

Net Profit Before Tax is taken as the starting point under the indirect method. To this, non-cash charges and non-operating items are added back or deducted as follows:

Add: Depreciation (non-cash charge — added back)
Add: Discount on Debentures written off (non-cash finance cost — added back)
Add: Interest on borrowings (finance activity item — added back to operating profit)
Less: Income from Lawsuits (investing/non-operating income — deducted)
Less: Income from Investments (investing income — deducted)

This gives Operating Profit before Working Capital Changes.

Adjust for changes in Working Capital (increase in current assets is an outflow; increase in current liabilities is an inflow):
± Changes in Trade Receivables, Inventories, Trade Payables, Other Current Assets/Liabilities as given.

This gives Cash Generated from Operations.
Less: Income Tax Paid (net of refunds) → Net Cash from Operating Activities (A)

B. Cash Flow from Investing Activities

Less: Purchase of Land (cash outflow — capital expenditure)
Add/Less: Purchase or Sale of Investments (as applicable)
Add: Income from Investments received (actual cash received)
Add: Income from Lawsuits received (if cash)
→ Net Cash used in Investing Activities (B)

C. Cash Flow from Financing Activities

Add: Proceeds from Issue of Equity Shares
Less: Redemption of Preference Shares (cash outflow)
Less: Interest Paid (the interest added back in operating activities is now shown as actual cash paid here, or alternatively classified under operating per AS 3 — disclose policy)
Less: Dividends Paid on Equity and Preference Shares
→ Net Cash from / (used in) Financing Activities (C)

Net Increase / (Decrease) in Cash and Cash Equivalents = A + B + C
Add: Opening Cash and Cash Equivalents
= Closing Cash and Cash Equivalents

Key AS 3 Rules Applied:
— Depreciation and amortisation are non-cash — always added back under indirect method.
— Interest paid may be classified under Operating or Financing; interest received and dividends received under Operating or Investing; dividends paid under Financing or Operating. Disclose the policy adopted.
— Tax paid is classified under Operating unless specifically identifiable with Financing/Investing.
— Preference Share Redemption is a Financing outflow (return of capital).
— Equity Share Issuance proceeds are a Financing inflow.
— Land Purchase for consideration (including non-cash if any) disclosed as Investing outflow; non-cash consideration disclosed as supplementary note per AS 3.

Once all actual figures are substituted, the closing balance of cash must reconcile with the balance sheet figure. Final Answer: Net Cash position = Opening Cash ± (A + B + C).